Fla. Power Plant, Community Face Hazy Future with EPA Rule

Regulations could shutter largest taxpayer in state's poorest county

by Steven Johnson

August 3, 2015October 29, 2015

When Anthony Shoemaker graduated from high school, he signed up for a stint in the Navy. The recruiter presented him with two job options. One card was for a gunner’s mate, the other for a boiler technician.

Shoemaker perused the duties of a gunner’s mate— working in a warehouse, keeping track of ammunition. He wanted no part of that. Then he studied the boiler technician card.

“I looked at that guy and I said, ‘I bet people get out of the Navy and get good jobs at power plants with this, don’t they?’” The recruiter nodded. “They just built a power plant down where I’m from,” Shoemaker responded. “When I get out, that’s where I’m going to work.”

111D Rule Released

On August 3, 2015, the Environmental Protection Agency released its final Clean Power Plan rule. The rule calls for a 32 percent reduction in greenhouse gas emissions from power plants by 2030 instead of the original 30 percent, and it gives states two more years (until 2022) before major reductions kick in.Seminole Electric Cooperative CEO Lisa Johnson said: “We are concerned that the EPA’s Clean Power Plan could still increase electricity costs for rural electric cooperative consumers. We appreciate the EPA extending the interim goal from 2020 to 2022 and for the modifications the agency appears to have made to the Florida targets, but until we can study this lengthy, complicated rule in more detail, we will not know the full impact to Seminole or to the state.”

After 27 years, the Seminole Generating Station has given that Palatka, Fla., country boy more than he ever dared dream of—good pay, a career, and a house on one acre ringed on three sides by cows from the high school agriculture program.

So “Shoe” is somber as he ponders the possibility that the gates to a plant honored for its environmental achievements might be padlocked so Florida can meet new federal pollution guidelines.

“I try not to let it consume me. But, yeah, it’s always in the back of my mind because I’ve been hearing the rumors: ‘Oh yeah, Seminole is going to be closed in five years,’” he says. “I told a bunch of people, I never thought in my 27 years that I hired in here that I would ever hear the stuff that’s going on now.”

To the outside world, Seminole Generating Station is an impersonal mass of turbines, boilers, gauges, and conveyor belts that combine to produce electricity and trails of steam that drift over St. John’s River in northeast Florida. But to its nearly 300 employees and the poorest county in Florida, the plant is about people, jobs, civic pride, and a way of life, with their fates woven together.

‘We Feel This Plant Has A Future’

Sometime this month, the Environmental Protection Agency will finalize its regulations for carbon dioxide emissions from existing U.S. power plants. Its draft rule would require Florida to cut emissions by 34 percent by 2020, rising to 38 percent by 2030, using 2012 levels as a baseline. According to EPA’s model, Florida will have to shutter 27 of 30 coal-fired plants. That includes Seminole Generating Station, which has at least 30 years of life left, according to consultants, and had a net book value of $753.4 million at the end of 2014.

Brenda Atkins (Photo by Garrett Hubbard)

The twist is that the 1,300-megawatt facility north of Palatka was cited by Power magazine in 2009 as one of the six top-performing coal plants in the world. Tampa-based Seminole Electric Cooperative, the generation and transmission cooperative (G&T) that owns the station, has spent $530 million on environmental upgrades. Some of those are aimed at emissions that aren’t yet an issue, such as a $9.9 million system to remove sulfur trioxide. “We did SO3 in 2008, and it wasn’t required,” says Brenda Atkins, who became director of plant operations that year. “We want to stay ahead of the curve.”

Atkins must balance industrial efficiency, employees anxious about job security, and a workplace in transition. The plant turned 30 in 2014, and some of the old hands hit their retirement marks. About half of the plant’s workforce has turned over in the last five years. She has tried to use that turnover to bring a more collaborative culture to the job site. “We try to do the right thing before it’s mandated. We’ve improved the operating statistics, and that’s hard to do with a 30-year-old plant,” she says. “We’ve made so many changes in the last four years to set up this station for success. But the exciting thing is, we know there are volumes left to do. We feel this plant has a future, and we’re absolutely committed to it.”

Ed Gonzalez (Photo by Garrett Hubbard)

But decisions ultimately will be made by people who have never set foot in Palatka, much less Seminole Generating Station. The best way for workers to have a voice, Production Manager Ed Gonzalez says, is to do good work.

Gonzalez is a self-made success story. Having moved from Puerto Rico to the U.S. mainland as a teenager, he landed a position at a trash-to-steam plant in New Jersey that he mistakenly thought was a recycling plant. Despite the blunder, he rose to production manager until the winters got to him and he relocated to Florida.

“What I bring up every time we have a meeting is that regardless of what is going on with the politics, we need to come here and do our job the best we can, especially at this time, so that people can see we do care,” he says. “We’re not just here to make power. We are about keeping it clean and helping the community. Maybe someone will notice.”

‘Something’s Going to Have to Change’

Cody Hensley is wearing a Dallas Cowboys do-rag, which is appropriate because he was born into the cowboy life. His grandfather owned a ranch, and his father and mother roped calves and broke broncos. But summers in Texas, Oklahoma, and New Mexico convinced him that the rodeo game is a tough way to make a living. “It’ll make you a millionaire, but only if you’re a billionaire when you do it,” he laughs.

Cody Hensley (Photo by Garrett Hubbard)

Foregoing the ranch, Hensley signed on with a coal-based plant operated by Duke Energy near Crystal River, Fla. Amid rumors—accurate, as it turned out—that Duke would close the facility, Hensley looked for something less transitory. He settled at Seminole, where he has been an auxiliary operator for a year and a half, supporting his wife and infant son, born in mid-April.

It turns out those bucking broncs might have been a steadier ride. Hensley has picked up a welding certificate, just in case.

“I’m 23 years old, and this is my second time through this,” Hensley says. “I’ve kind of seen somewhat firsthand what it’ll do in a way. I’ve got a family. Take a job away from me now, and I can’t find something for three or four months, it puts you in a pinch.”

Hensley’s apprehensions are shared by both plant newbies and veterans, who worry about losing good-paying jobs with excellent benefits in a community where such blessings are few and far between. “It’s probably one of the hardest things I deal with,” says Lisa Johnson, CEO of Seminole Electric Cooperative. “It’s hard to look someone in the eye when you can tell they’re genuinely concerned about their livelihood.”

Tracey Jett was hired 35 years ago as a security guard when the plant was a pile of dirt. Today, she is a motorcycle-riding, sample-collecting environmental technologist who provides her family’s health insurance.

“It’s hard to look someone in the eye when you can tell they’re genuinely concerned about their livelihood.” – Lisa Johnson, CEO of Seminole Electric Cooperative

A couple of years ago, her husband, the assistant police chief in nearby Green Cove Springs, had open-heart surgery and retired from his job. Jett is counting the days to his Medicare eligibility because if she lost her job and benefits, “the insurance would completely eat us up alive.”

Tracey Jett, an environmental technologist, collects samples from the James River outside of Seminole Generating Station in Palatka, Fla. (Photo by Garrett Hubbard)

It’s more than that, though. Jett abandoned her own criminal justice career to join Seminole when she was 19, so she’s not ready to retire. Her daughter is getting married, and she’d like to get through that. In light of her husband’s retirement, it never hurts to boost the size of the nest egg.

“People want to get on here so bad. It’s a great job. It’s a great place to work,” she reflects. “I think they all have in their minds this place is going to be here forever. Eventually, it’s not going to be here. Something’s going to have to change for this place to be here forever.”

Jason Akers’ family has as much at stake in Seminole as any other. A Palatka High School graduate, Akers has been at the plant for 11 years. Two brothers-in-law and his father-in-law work there, as does his former soccer and baseball coach.

Akers is a support systems control room operator, where he takes care of planning and projects in somewhat the same fashion as an air traffic controller. Last April, he finally got off irregular shift work. That gives him more time to watch the progress of his two boys, both of whom are budding baseball players.

“The plant means a lot to my family,” he says. “If we were to shut down, I wouldn’t want to move from Palatka. I’d try to stay here and figure out something.”

Akers is caught between the old and the new—not enough experience to accrue the benefits of seniority but deep enough into his career and his hometown that he can’t afford to start over. He once worked at a marine company, fixing motors and washing boats; he knows only that he doesn’t want to do that again. His wife is a nurse, and maybe she could pick up some more hours in a worst-case scenario.

“I think about that almost daily. Some days, you think you might go look for another job. Some days, you think, ‘Ahh, it’ll work out. Maybe something will change or the regulations won’t go into effect yet,’” Akers says. “Yeah, it’s thought about daily.”

‘Downward Spiral’

Chip Laibl is crunching the numbers and the numbers are crunching back.

Chip Laibl (Photo by Garrett Hubbard)

Laibl is one of five members of the Putnam County Commission. Over a roast beef sandwich at a Palatka restaurant, he turns his attention to the Seminole Generating Station. Last year, it was the largest taxpayer in the county at $5.1 million. Putnam collects about $30.4 million in annual tax revenue, so taking Seminole off the books would pull the carpet from under a county struggling to get to its feet. “A loss like that one just stings for a long time,” Laibl says. “Collectively as a community, you get into that mindset: ‘We’re never going to be anything. It’s not working for us.’ It creates a downward spiral.”

But the bell cannot be unrung. Census Bureau statistics show that Putnam County, population 72,143, has a 26.4 percent poverty rate, the highest unemployment rate in the state, and per capita income of $18,377, about 70 percent of the Florida average. Nearly 23 percent of students fail to finish high school.

Despite the odds, Laibl says Putnam County was making progress until the recession hit in 2008 and a state law doubled the amount of value homeowners could exclude from property taxes. That punched a $3.5 million hole in the county budget during a two-year period.

“It knocked us right back down,” he says. “To lose the plant on top of that, it would just be devastating.”

Along with a Georgia-Pacific paper mill, Seminole Generating Station is a major artery in the Putnam economy. When construction started during the early ’80s recession, local businesses—like the building supply firm owned by Dana Jones’s family—got a shot in the arm.

“I cannot tell you how happy and thrilled we were because everything out there, probably with the exception of very few building materials, came from our company,” she says. Jones is possessive about the plant for another reason. As president of the Putnam County Chamber of Commerce, she has pulled together data on the meaning of a plant retirement.

Putnam would lose 400 direct jobs, including about 300 full-time workers at the power station and another 100-plus at the Continental Building Products facility on the plant’s grounds. Seminole converts the byproduct from a sulfur dioxide control device into synthetic gypsum, which Continental uses to make wallboard.

“It knocked us right back down. To lose the plant on top of that, it would just be devastating.”– Chip Laibl, Putnam County Commission

Seminole’s planned outages and outsourced maintenance is money in the bank for hotels and restaurants; scheduled outages during 2013 and 2014 brought in about 1,000 contractors for several weeks. Factor in retail losses, and Jones estimates Putnam would lose 700 to 800 jobs and about $8 million in personal income.

The Putnam chamber has been honored twice in seven years as chamber of the year in its category by the Association of Chamber of Commerce Executives. But it’s in a rural area that has trouble attracting new industry, especially after key state tax incentives expired earlier this year.

“All of rural Florida, I think we’ve had one major job announcement since the recession,” Jones says. “That’s a long dry spell not only for Putnam but for all of the state of Florida.”

Seminole’s impact on Palatka and Putnam County goes beyond metrics. Inside the plant administrative building, Atkins has supervised development of a wall of caring. Look carefully, and you’ll see the grand champion swine Seminole bought from Courtney Motes at the 2005 Putnam County Fair. Employees collected money for youths at Rodeheaver Boys Ranch so they could buy Christmas presents for themselves and their families. Atkins traveled to Texas as part of a group to scope out a science, technology, engineering, and math project to replicate in Putnam County schools. Seminole contributes to the new tuition-free school, and Atkins calls it “one of the most satisfying experiences of my life.”

All co-ops are committed to their communities in some way. But Johnson, the CEO of Seminole, says this relationship is different because of the way local residents rally around their power plant.

“That bond is a two-way bond. And it’s such a luxury,” Johnson says. “There is a great story here. There is a great story at co-ops all over the country. Sometimes you just have to step back and shout it out loud and see if anybody will listen.”

A Game Where the Rules Keep Changing

It took Clay Electric Cooperative three years, repeated property reshufflings, countless meetings, and $2.6 million to build a 7,500-sq.-ft. office off a county road for its Gainesville District.

How then, asks Derick Thomas, the co-op’s director of member and public relations, is it possible to replace the generation that will be idled if the Seminole Generating Station closes by 2020?

Of the new Clay Electric headquarters, Thomas says, “It’s an office building. It’s an asphalt driveway. I can’t imagine what it would take to put a gas line down the side of the road or bring a transmission line in. It’s just unreasonable to expect you’re going to build out 1,300 megawatts in five years.”

“We thought we were building something for a lot longer than 30 years,” says Kelley Smith, NRECA Florida director and a former member of the Putnam County Commission. (Photo By: Garrett Hubbard)

Thomas knows the comparison between an office structure and a power plant is imprecise. But he also knows Clay Electric has a major stake in the outcome of the Seminole plant.

Based in Keystone Heights, Clay Electric is the third-largest electric co-op in the country with about 140,000 members. It faces a triple whammy if EPA rules force the plant to close its gates.

• Clay Electric’s purchase of wholesale power from Seminole represents 73 percent of the co-op’s budget. Seminole would have to buy replacement power from some other source, amid more competition and higher prices, for its member co-ops such as Clay Electric.

• The co-op serves Putnam County and the plant. If laid-off workers uproot, it would lose the industrial load and part of its residential base. Already, it is struggling with dead-end accounts in its home base of Clay County, which has one of the highest foreclosure rates in Florida— one in every 287 housing units, according to RealtyTrac.

• Clay Electric is one of the owners of Seminole Electric Cooperative and, by extension, of the power plant. If the station closes before its currently planned end life of 2045, the co-op’s members will have to bankroll hundreds of millions of dollars in outstanding loans—the plant’s projected estimated debt will be $876.4 million at the start of 2020 and $485.4 million at the start of 2030.

View Photo Gallery | Seminole Generating Station

The fate of the 1,300-MW Seminole Generating Station in Florida, built in the wake of the 1978 Powerplant and Industrial Fuel Use Act, hangs in the balance. (Photo By: Garrett Hubbard)

George "Zorba" Johns and his son Paul fulfill orders for customers. Zorba started Palatka Bolt and Screw 35 years ago and considers Seminole Generating Station like family for his business and the community. (Photo By: Garrett Hubbard)

Tracey Jett, an environmental technologist, collects samples from St. John’s River outside of Seminole Generating Station in Palatka, Fla. (Photo By: Garrett Hubbard)

The main control room at the Seminole Generating Station in Palatka, Fla. The plant could face closure by 2020 if current EPA regulatory plans go into effect. (Photo By: Garrett Hubbard)

Putnam County collects about $30.4 million in annual tax revenue. Taking Seminole, the county's largest taxpayer, off the books would pull the carpet from under Putnam's struggling county. (Photo By: Garrett Hubbard)

“We thought we were building something for a lot longer than 30 years,” says Kelley Smith, NRECA Florida director and a member of the Putnam County Commission that greenlighted the project in the early 1980s. “We anticipated it would be a 50-to-60-year facility.”

A forester and businessman, Smith also is chairman of the Clay Electric Board of Trustees. He says accounting for the debt on a mothballed plant would be a huge financial blow to the co-op. “Our members would have to pay for that stranded asset for 20 years or more. That’s going to be pretty tough for them if the regulation stands as proposed.”

Thomas worked in the field with members for 10 years and says he’s concerned about the trickle-down effect of higher electric bills.

“Electricity does the same thing, whether it is 3 cents per kilowatt-hour or 30 cents per kilowatt-hour,” he says. “If you don’t change your lifestyle one iota and your bill goes up $40, all you have is $40 less. You don’t have anything else to show for it. And if you don’t have $40, then you’ve got a problem. That starts affecting people at a lifestyle level.”

Clay Electric has kept its members abreast of the EPA’s Clean Power Plan in its monthly newsletter and explained in traditional and social media how closing the generating station could affect them. That’s helped to get some members engaged, but the poor scrub pines of north Florida don’t carry a lot of political wallop.

“I think the biggest challenge that all of us have right now is to make a plan where there’s no certainty in the plan. It’s like we’re trying to play a game, but the rules keep changing,” Thomas says. “My hope is eventually legislators and regulators will hear our concerns and put some reasonable timelines in to allow us to adjust to such a drastic change in our energy policy and our energy generation.”

‘Zorba’

Zorba’s feet hit the floor every morning at 6:30 as he tackles the day with the same zeal that led him, as a 12-year-old, to hurl a basketball opponent to the ground, earning fame in the manner of movie legend Zorba the Greek.

George “Zorba” Johns. (Photo by Garrett Hubbard)

“Zorba” is George Johns, raconteur, community stalwart, sportsman, and owner of Palatka Bolt and Screw, where he presides over an industrial fastener business from a single-story warehouse off U.S. 17 in Palatka. If Johns doesn’t have it in his stockpile of 32,000 line items, chances are he can fashion it, using the same resourcefulness with which he fabricated a gun that could fire a frozen potato through a quarter-inch piece of plate steel.

“If it’s got threads on it, we try to stock it. We ship all over the United States,” he says. “I can’t wait for somebody to call me and say, ‘Something’s blowed up! Help!’ That’s what I live for every day.”

The son of a Greek-Cypriot immigrant, Johns was performing new machine installations at industrial plants in the Southeast when he encountered trouble getting fasteners from his vendors.

On August 1, 1984, Palatka Bolt and Screw was born with $40,000 of inventory and Johns and his future wife as its workforce.

The company has an unbroken 31-year contract with Seminole Generating Station; the plant and the Georgia-Pacific paper mill are his bread and butter. When a large oil fire damaged Seminole’s generators in 1988, causing $20 million in damage, Johns was ready with parts to get it back up to speed.

“When you say to me, ‘Is Seminole a good steward to the community?’ I say, ‘Damn right, they are!’” – George “Zorba” Johns

“That eight months it took to rebuild that plant was my saving grace. So when you say to me, ‘Is Seminole a good steward to the community? I say, ‘Damn right, they are!’ I would have never made it without Seminole and G-P.”

It has not always been easy for Johns to keep his five-employee business above water. His operation had a rough spell after 9/11, when all the industrial facilities he worked for pulled back 30 to 50 percent of their maintenance budgets to spend more on security measures. Until the Great Recession of 2008, Johns could count all of his bounced checks on two fingers. Then, in one month, he lost 80 customers. “But we persevered, we fought through it, we climbed back out of that hole, and we’re still here,” he says.

That’s why he insists that Seminole Generating Station—and the community it serves—deserves a fighting chance to show what it can do.

“This plant is successful. It’s going way above and beyond for its community. Don’t take this away from us,” he says. Johns pauses a moment, opens his hands and arms expansively and explains what he means by “this.”

“It’s not just about employing people. It’s Little League, the parks, the United Way, the contributions. They do a big-city business, a huge job, but they still have roots. They have a love for their community. If we lose that, we lose small-town America.”

He repeats to himself, only more quietly. “Don’t take this away from us.”